The strength of the NZD will have the biggest impact on sheep and beef farm gate receipts and profitability, according to M&WNZ's Mid-Season Update for 2009-10. Economic Service Director, Rob Davison says the NZ dollar appreciated remarkably over 2009, compared with the previous year. "Unfortunately for the sheep and beef sector, the NZD strength has been against the US dollar , British pound and Euro where the majority of NZ's beef and lamb are sold. We expect this will continue in the first six months of 2010. "We estimate there will be an 8.6 per cent decrease in total gross farm revenue to $317,600 for the average NZ sheep and beef farm in 2009-10. On-farm input prices are expected to remain stable (+0.5 per cent) which will be a welcome relief from the 9.7 and 7.6 per cent increases experienced in the previous two years. However, this leaves per farm, profit before tax at $37,400, a significant decrease from 2008-09's $58,800." Mr Davison said offshore prices for sheep and beef products continue to remain strong in 2010 in spite of the financial crisis and have improved in some cases. With export volumes for wool, lamb, mutton and beef similar to last year (+1%), the exchange rate factor will reduce those export receipts to $5.4 billion which is 12 per cent down on last year, he said. "This translates to $700 million being wiped from meat and wool sector receipts, just because of the exchange rate. The high NZD completely masks the price levels achieved offshore and the productivity increases." Key points:- Average sheep and beef farm profits before tax are expected to be $37,400 in 2009-10, down from $58,800 in 2008-09 Offshore prices for sheep and beef products are strong, but the strength of the NZD is eroding improved returns Sheep and beef export receipts are expected to be $5.4 billion (- 12 per cent) Lamb export volumes are up 3.4 per cent with receipts totalling $2.5 billion (-10 per cent) Farm gate lamb prices are expected to average $72 per head for a 17.5 kg lamb, compared to $89 last year (-19 per cent) Beef export volumes are expected to be down 4.2 per cent with receipts totalling $1.9 billion (-18 per cent) Wool export volumes up 15.8 per cent with export receipts up 10.9 per cent to $631 million On farm input costs expected to remain stable. Click here to read full report.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.